A Young Investor's Cheat Sheet
Reader Comments
Good Grief!!
1. If my employer only matches 3%, why would I want to stash at least 7%? You usually only have a short list of 401k investments to choose from. Why not stash up to the match and invest the rest with Edward Jones or Northwestern Mutual etc? Seems like you'd really be limiting yourself to a pretty mediocre and short list of investments.
2. 90% of investments in stocks? When you're young and don't have a lot of money, what are you supposed to do if an emergency pops up? All this excitement about investing and no mention of an emergency fund. How about 75% in 401k and stocks and the other 25% in permanent life insurance that can pay back about 7-8% in dividends by the time you're 60 AND have readily available cash value for an emergency AND not incure penalties AND grow TAX FREE AND protect your assets AND guarentee that you'll have that insurance for life? There aren't enourmous gains but you're guaranteed to get back more than you put in and it's extremely versitile.
3. A "snappy 30-minute investing start up kit"?!?!?! It's only several thousand dollars you're toying with. Put your trust in this 30 minute internet kit. Why waste all that time working with a proffessional?
Gee whiz...
Why 401k
"You usually only have a short list of 401k investments to choose from. Why not stash up to the match and invest the rest with Edward Jones or Northwestern Mutual etc? "
401k provides pre tax investment which will basically increases yous investment amount by 25% nor whatever your tax rate is. Even if you get a better yield from a non tax deferred investment source, it is difficult the overcome the benefits of tax deferred investing.
I like the 401k max for most young people
Lets face it... Most busy body youngsters have no clue about saving money... They have a blind view of to have more money.. I must make more money... Which the ones lucky enough to make more money... Then tend to only spend more money... Missing totally that a young $70,000 yr income family... With good planning and a wise money choices at 25... Would have little to no money worries at 50.. That and should they have children along that path.. Their kids wouldn't be stressed about student loans... Not just that their parents would be well off... But also they could start them young on what mistakes not to make and how to invest.. Starting a cycle of improvment not debt.. As to where that very same family making 120,000 yr at 25. With a spend it all... Shop till its gone attitude... Could easily be strapped in... Burried under a mountain of bills.. With no idea how to get out.. Leaving their children little help for school payments.. Not to mention bad habits of spending and thus pass on the same cycle of stress to their kids...
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